Apple Inc.’s first split in nine years removes an obstacle to its inclusion in the Dow Jones Industrial Average: its $525 stock price.

The iPhone maker will exchange seven shares for each that is held on June 2, a move that if enacted at today’s closing price would lower its shares to about $75 apiece. Previously, the stock traded for so much that putting it in the Dow would have given Apple too much influence in the 118-year-old equity gauge, which ranks companies by the level of their shares rather than market value.

Apple’s exclusion highlights idiosyncrasies in the Dow methodology that leave some of the world’s biggest companies out of one of the best-known stock measures. While the lower share price clears one obstacle, changes to the Dow are rare and any decision on additions will be up to S&P Dow Jones Indices LLC, the joint venture that oversees the average.

“I’d think Apple is up next,” said Richard Moroney, chief investment officer at Horizon Investment Services in Hammond, Indiana, and editor of the Dow Theory Forecasts newsletter, said in a phone interview. “Really the only barrier keeping Apple out of the Dow was that high price tag. It’s the biggest company, it’s clearly a quality company with a long record of success and it’s the leader in its industry -- all things the keepers of the Dow Jones Industrial Average look for.”

David Blitzer, chairman of the S&P Dow Jones index committee, declined to comment on what a stock split at Apple, the world’s most valuable company, could mean for its inclusion in the 30-stock Dow.

More Attractive

At $75, Apple would be roughly tied with UnitedHealth Group Inc. for the 18th-biggest weighting in the Dow. The index’s biggest portion is held by Visa Inc., whose shares closed today at about $209. Cisco Systems Inc. is the smallest at $23.50.

“It makes the stock more attractive to the smaller buyers,” Jon Burnham, a New York-based fund manager for Burnham Asset Management Corp., which oversees about $1.2 billion, including Apple shares. “It’s better priced and more people will buy it.”

Stock splits have diminished in the last decade as the role of institutions and exchange-traded funds grew in the equity market, leaving some large companies effectively ineligible for the Dow average. Just 14 S&P 500 companies split their stock last year, compared with an annual average of 49 since 1980, according to Howard Silverblatt, a senior index analyst at S&P Dow Jones in New York.

Index Distortion

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